How AAC TV deal could impact the future of college football rights

NEWPORT, R.I. — The trappings of American inequity dot the landscape here, as even the 1-percenters can’t help but gawk at the looming mansions on the Cliff Walk owned by iconic American families. Amid this gilded setting, the American Athletic Conference has held its Media Days since the league’s inception five years ago. And it has spent that time balancing Rockefeller ambitions on a Bundy family budget, desperately seeking a way to launch itself out of college football’s middle class.

On the field, the American Athletic Conference has acquitted itself well since the football iteration of the Big East collapsed. The AAC has made clear its aspirational desires, launching a persistent “P6” campaign to include itself in the top echelon of Power Five conferences in college sports.

The AAC has shown in a small sample size that it can be intermittently competitive with the top leagues in college football. That includes two marquee bowl wins the past three seasons, with Houston toppling Florida State in the Peach Bowl after 2015 and undefeated UCF thumping Auburn in the same game last season.

But to change the narrative on the field, the next step for the Artist Formerly Known As The Big East is to change the financial model off it. For all of AAC commissioner Mike Aresco’s stumping for the sport’s model to change to a Power Six, there’s no chance of that transcending empty rhetoric until the league’s financial revenues look more Rockefeller than Bundy.

The league is wheezing through the final two seasons of a seven-year, $126 million television contract with ESPN that was essentially a hostage negation that doubled as a TV deal. The AAC, fresh off a spate of realignment departures, did the best it could at the time and signed on for short money to be more attractive this time around. For ESPN, it has proven a grand bargain for the quality and quantity of content. (Essentially, each major conference program in the Power Five gets more television revenue annually than all 12 teams in the AAC).

These days, the schools in the AAC are getting somewhere around $2 million a year in television revenue, which means that schools like Clemson and LSU are paying their defensive coordinators more than UCF and Houston are receiving each year in TV revenue. With the revenue threshold for the Big Ten crossing $50 million annually per school – much of which is from television – the distance that the AAC is behind financially is staggering.

No one knows this better than Aresco, who told Yahoo Sports in a phone interview: “This TV deal will determine how people view the conference,” Aresco said, “and how they view me.”

Aresco earned $1.86 million on the last tax returns released by the league – essentially a television share. And the league needs an exponentially bigger deal – “multiples,” to use Aresco’s word – to continue to compete with the programs it aspires to join.

How much more? That’s the magic question whispered by coaches and athletic directors at the league’s annual clambake here. Is Facebook, Amazon or another digital streaming service going to push the league’s television reality into a more competitive air? HBO has hinted publicly that it’s interested in more live sports. The digital television network Stadium has quickly become a player. Places like Google and Twitter certainly have the capital to dive in. “Can they?” said Chris Bevilacqua, a veteran media consultant and co-founder of Bevilacqua Helfant Ventures. “Absolutely, yes they can. Will they? I have no idea.”

He’s not the only one. Along with providing a lifeline for schools forced to spend much faster than they are earning, the new television deal also offers the last compelling clue before the next flurry of Power Five contract negotiations. The Big Ten is up next after the 2022-23 season. (My colleague Dan Wetzel pointed out that the Big Ten Network’s uncertain future, which underscores conventional cable issues, will be a compelling test case for the future of college sports). The Pac-12 rights come up after the 2023-24 season, and both the entire Big 12 and the SEC’s high-end CBS package in 2024-25. (Cue the realignment speculation in about two years).

Things could look a lot different by then, as one prominent athletic director summed up the tension succinctly: “If anyone knows how people are going to consume this content in 2025, they’re lying.”

For now, however, Aresco is toeing the party line and saying the league’s preference is to stay with ESPN. The league’s exclusive 30-day negotiating window with the network begins on Feb. 1. “First things first,” he said. “We want to get something done with ESPN if possible. We view them as the best alternative. They have offered us great exposure and helped us build our brand. That would be our preference.”

There’s a sexier potential option than everyone around college sports is curious about. Aresco, his staff and consultants have done their digital due diligence on all potential partners. Aresco’s background also comes in traditional television, as he was a longtime CBS executive before being picked to restart and revive the league five years ago. “ESPN is still in 85 million homes,” he said. “It’s still a significant number of homes. The ratings have been generally stable. I don’t think anyone knows precisely where it’s going.”

What’s the most likely outcome? It’s difficult to predict, but industry sources see the confluence of a primary deal with ESPN and some subsidiary deals with other channels or digital networks. (That’s been the model of the Big 12, Pac-12, and others). Maybe ESPN buys it all and sells some off? Maybe Facebook dabbles on a second-tier package like it did for Major League Baseball? As for the financial numbers, there’s fluctuating predictions on exactly what multiples the AAC will receive.

At least double? Sure. Likely triple? It’s needed. Those projections are tricky, especially in a rapidly changing environment, as the size of the deal will come down to market forces – or lack of – more than anything within Aresco and the league’s control.

Through exit fees, the Big East’s leftover NCAA tournament units and solid athletic director and coaching hires, the league has survived. On the field, it has outperformed its current television deal by being competitive with Power Five teams. It has also played weeknight games for exposure, garnered respectable ratings and become an incubator for rising coaches like UCF’s Scott Frost (Nebraska), USF’s Willie Taggart (Florida State), Memphis’ Justin Fuente (Virginia Tech), Temple’s Matt Rhule (Baylor) and Houston’s Tom Herman (Texas).

To begin keeping those coaches – next in line is Memphis’ Mike Norvell – and building a league that’s a destination more than a stepping stone, the AAC needs an influx of cash. The next year will determine if the league’s fiscal reality can match its Rockefeller aspirations.